While fuel prices certainly did not help, the carrier was recording losses near $1mil a day with negative operating margins very much due to terrible yields across its network.

Oasis did not do much besides flood capacity into markets such as London and garnered only 50% of the revenue its peers were getting, something that would likely be even worse today with the global economic slowdown. So while fuel might be cheap, if there is no traffic to be had things are just as grim if not worse.

I suppose in some ways Oasis wanted to do what Virgin did in UK, however the big difference was that Branson was willing to cover loses for nearly a decade before seeing much of a profit, something that the Oasis backers could not.

Quoting LAXintl (Reply 1):While fuel prices certainly did not help, the carrier was recording losses near $1mil a day with negative operating margins very much due to terrible yields across its network.

They indeed had an unsound business model. Long-haul budget (at least at that time) was certainly unsustainable. As I had mentioned in an article when Oasis went bust,

Quote:For Oasis HongKong, budget and business, together, were a confusing branding value proposition from the beginning. They tried to provide punctual, top-notch service and in-flight entertainment at discount prices. In the middle of it all, they forgot about recovery of money. Great expectations, good experience, sad ending.

I'm sure AirAsia X will have much more success given the current low prices and better management that has already made AirAsia such a huge success.

1. They had a confusing brand image. They were neither low-cost nor full service. This made consumers confused as to what they were actually paying for.

2. They were competing against BA, CX, VS and NZ on non-stop flights, most of whom offered similar fares. On several occasions they were more expensive! Who would fly O8 when CX or BA were offering flights for a similar price? Especially considering their confusing product and brand.

3. Their product did not stand out from the crowd. A lot of airlines have a unique selling point. They either offer an exceptional service or exceptionally low fares. O8 offered neither. They were a standard airline offering slightly below average fares. There was nothing fresh or new about them. Nothing to catch they eye of the consumer. It puzzles me why they did not ditch the complementary meals, but offer an extensive a la carte menu instead. At least that way they could generate some extra revenue and have a product that differed from the competition.

4. Their Business Class product was poor in comparison with the competition. This made it hard to fill with a decent yield.

I think had they had adopted an Air Asia type model they would have done a lot better. Air Asia does well because people know who they are, what they are and what they offer.

Quoting LAXintl (Reply 1):Oasis did not do much besides flood capacity into markets such as London and garnered only 50% of the revenue its peers were getting, something that would likely be even worse today with the global economic slowdown. So while fuel might be cheap, if there is no traffic to be had things are just as grim if not worse.

True. If they had of survived to see cheaper oil prices they would now be suffering a slow and drawnout demise.

Quoting B747-4U3 (Reply 3):1. They had a confusing brand image. They were neither low-cost nor full service. This made consumers confused as to what they were actually paying for.

Couldn't agree with you more. Management needs to have a clear positioning for the brand themselves, before projecting it to the world. "A budget "business" airline is the epitome of confusion.

Quoting B747-4U3 (Reply 3):3. Their product did not stand out from the crowd. A lot of airlines have a unique selling point. They either offer an exceptional service or exceptionally low fares. O8 offered neither. They were a standard airline offering slightly below average fares. There was nothing fresh or new about them. Nothing to catch they eye of the consumer.

You put it very nicely. I couldn't help but notice that this is the state of all major US airlines these days (except VX, WN, JetBlue). You can literally replace "their" and "they" in the above sentences with AA, UA, NW...you name it, and it works. Sad, but true.

On a similar topic. What about Zoom/Zoom UK?
Could they have survived?
They offered a good product, and were well known throughout the UK and Canada, and seemed to be making good progress with expansion. Despite SAN/FLL being interesting new ventures for them.

When Oasis started up, there were doubts in the industry of its survival. An AWST article cited their over-dependence on O&D traffic, especially in markets that were already dominated by some pretty heavy players (CX mainly), and without a network or code shares on either end it would have been very difficult for them to attract customers. It was a very flawed or overly optimistic business model.

I actually disagree with some points B747-4U3 made. Oasis offered exceptionally low fares. Some may argue unsustainably low fares, but low indeed. From YVR to HKG, one would rarely if ever see a fare below $1,000 CDN before Oasis entered the market. But when they did, Cathay and Air Canada started matching Oasis' fares.

The price difference between Oasis business class and that of its competirors was so different than comparing the respective products is unfair. Sure Cathay had a better business class product, but it also cost thousands of dollars more.

Oasis' big downfall was that it couldn't find a good niche market. It relied on the large Hong Kong Diaspora, but it is already well served by the incumbent carriers. When Oasis launched their Vancouver flights, Cathay was announcing triple triple-daily flights between HKG and YVR.

Stephen Miller's (Oasis CEO) research suggested that a large number of people were travelling between Vancouver and Hong Kong via a third country, such as Japan, South Korea, or Taiwan, because they couldn't find a seat or a price they could afford on one of the non-stops offered by Cathay and Air Canada.

Likewise, his research suggested a large number of people travelling between London and Hong Kong were using Middle Eastern carriers.

It was this market that he was hoping to go after. Whatever the case, their business model failed. They had a nice product and great fares. And their livery was great.

Quoting Kdonohue (Reply 8):I actually disagree with some points B747-4U3 made. Oasis offered exceptionally low fares. Some may argue unsustainably low fares, but low indeed. From YVR to HKG, one would rarely if ever see a fare below $1,000 CDN before Oasis entered the market. But when they did, Cathay and Air Canada started matching Oasis' fares.

That is what I meant. They did offer low fares, but when the competitors started to price match, Oasis' fares were no longer low when compared to the competition. I'm not sure about YVR, but whenever I checked their LGW-HKG-LGW flights they were rarely much cheaper than BA, CX or NZ in Y.

Quoting Kdonohue (Reply 8):The price difference between Oasis business class and that of its competirors was so different than comparing the respective products is unfair. Sure Cathay had a better business class product, but it also cost thousands of dollars more.

You're right, it is unfair to compare O8 and CX's products when there is such a huge price difference. However, I do believe that the reason Oasis' Business Class was so cheap was simply because they were having trouble filling it up. I suspect this was because: a) Businesses tend to have corporate contracts with large airlines with an extensive network, b) People who could afford it would sooner fly with Cathay or Air Canada regardless of the price, c) At other times Qatar Airways, KLM and Lufthansa offered similar prices to O8 (although via their respective hubs) and d) The product wasn't marketed as well as it could have been and was probably the wrong product for the market.

Quoting Kdonohue (Reply 8):Stephen Miller's (Oasis CEO) research suggested that a large number of people were travelling between Vancouver and Hong Kong via a third country, such as Japan, South Korea, or Taiwan, because they couldn't find a seat or a price they could afford on one of the non-stops offered by Cathay and Air Canada.

Likewise, his research suggested a large number of people travelling between London and Hong Kong were using Middle Eastern carriers.

It was this market that he was hoping to go after.

This was a sensible market to go after. However, from my experience flying the LHR-HKG route with BA and CX, the flights either seem to be completely full or completely empty. QR and EK (who are the only Middle Eastern hub & spoke carriers to fly to HKG) heavily rely on traffic from the Middle East and Africa to fill their flights to Hong Kong, so on the days when traffic from the UK to HKG is light, they still have other markets to rely on to fill their flights. O8 did not have this. If the traffic from UK to HKG was light, they would loose out as there would be fewer customers, and they would loose again because BA and CX would offer competitive fares which would mean that O8 flights would either leave empty, or full of very deeply discounted tickets.

Quoting Kdonohue (Reply 8):Oasis' big downfall was that it couldn't find a good niche market.

I think this was their biggest downfall too! I think they struggled to find that niche because they had the wrong product and a confusing brand. Were they low cost or full service?

I think to have survived they would have needed to either be a true low cost carrier, like Air Asia. Or, had an entirely different product from the competition which made them stand out. Had they had offered something fresh and modern like Virgin America they might have had more luck standing out from the competition and finding a niche.

It's a real shame O8 failed. I guess they just couldn't come up with the right formula to crack into the market.